MultiChoice In ‘Financial Mess’ As Subscribers Dump DStv For Affordable Broadband
LAGOS OCTOBER 15TH (NEWSRANGERS)-South African pay TV consumers are fast dumping DStv as access to affordable, uncapped Broadband improves, just as online streaming services gain popularity in the Southern African economy.
ConsumerConnect gathered DStv parent company MultiChoice’s annual report for the year ended March 31, 2024, indicated that active DStv subscribers in South Africa (SA) declined from 8.0 million to 7.6 million over the last year.
Though South Africa only accounted for 48.5 percent of MultiChoice’s active subscribers, it accounted for 60 percent of group revenue.
By implication, the country is a core part of the pay TV company’s operations, and is important to ensure its financial sustainability.
However, the company is struggling to hold on to its subscribers – South Africans are dumping DStv in droves.
Financial statements reveal MultiChoice ‘technically insolvent’
MultiChoice’s financial statements for the year ended 31 March this year showed that the company recorded a R4.1 billion loss, and has become “technically insolvent,” Daily Investor report said.
In affirming the development in regard to a significant decline in subscriptions, MultiChoice stated: “Active subscribers declined from 8.0 million to 7.6 million, while the 90-day active base reduced from 9.3 million to 8.6 million,” reported Daily Investor.
What is also particularly concerning is that all segments of MultiChoice’s DStv subscriber base declined.
DStv Premium declined by 8 percent year-on-year, its mid-market declined by 9 percent year-on-year, while DStv mass market declined by 1 percent year-on-year.
In essence, DStv is losing subscribers across the board, and there is no clear way to convince them to return, report said.
Despite the declining subscriptions negatively impacting its market share, MultiChoice claimed to have dusted off its book of excuses, including severe economic pressure, consumers’ financial distress, the high cost of living, and elevated interest rates.
“The impact of consistent load-shedding creates an environment where customers are reluctant to reconnect.
“This translated into an overall drop in viewership, subscriber activity, and subscriber numbers,” MultiChoice said.
Nonetheless, as MultiChoice should have discovered by now, excuses do not make up for lost subscribers or lower revenue, according to report.
MultiChoice’s financial statements for the year ended 31 March, 2024, showed that it recorded a R4.1 billion loss and has become technically insolvent.
The bad news for MultiChoice is that the factors that caused its “subscriber decline and dismal financial position are accelerating.”
Rationale for decline in DStv Premium in past 8 years
The fundamental reason for DStv Premium’s decline over the last eight years was a combination of uncapped fibre and Netflix launching in South Africa, report noted.
Uncapped fibre was initially only available in richer areas; so DStv Premium was the first segment to decline.
As uncapped fibre and wireless alternatives, like Rain, started reaching middle- and lower-income areas, those households also started to dump DStv.
Companies, such as Vumatel and Herotel, are now accelerating the rollout of affordable fibre services in lower-income communities.
It does not take a rocket scientist to predict what will happen to DStv subscriptions in these areas as households get uncapped Internet access.
To make matters worse, online streaming is also improving rapidly. Netflix and Amazon Prime are no longer DStv’s main concerns.
Whether people are looking for sports, movies, TV series, or documentaries, a streaming service serves that need. Many of them are free, according to report.
On bundled Broadband access and streaming package initiatives
It is also noted that MultiChoice saw this problem coming and, in preparation, launched two initiatives – bundled Broadband access and a bundled streaming package.
However, the initiatives were not as successful as MultiChoice would have hoped, as the move failed to get the traction it had anticipated.
MultiChoice discontinued its DStv Internet fibre products, including bundled offers that combined Premium or Compact subscriptions.
MultiChoice told MyBroadband it will “continue to review the DStv Internet offerings as demands shift.”
To rub salt into their wounds, Telkom as well plans to launch a content platform with Netflix, Amazon Prime, Disney+, and other streaming services for one fee.
Telkom is building a content aggregating platform where users can subscribe to a bundle of streaming services.
Speaking on the development, Telkom Consumer CEO Lunga Siyo reportedly said the firm would provide the data needed for their subscribers to stream the content to which they subscribe.
As entertainment moved from satellite to Internet streaming, it opened the door for companies like Telkom to compete against MultiChoice.
MultiChoice previously warned that over-the-top (OTT) streaming providers, such as Netflix and YouTube, pose an existential competitive threat to its DStv offering.
This scenario is now coming true, and unless MultiChoice can become a big streaming player through Showmax and DStv Stream, it will face serious challenges.
ConsumerConnect
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Posted by News Rangers
on Oct 5 2024. Filed under Business, National.
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